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The Canada-U.S. Free Trade Agreement and labour market adjustment in Canada

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Author Info
Eugene Beaulieu

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Abstract

Evidence suggests that the Canada-U.S. Free Trade Agreement (CUSTA) had almost no effect on earnings and had a small negative effect on manufacturing employment. Theory suggests that a change in trade policy may affect skilled and less-skilled workers differently. The labour market consequences of CUSTA tariff reductions are analysed in this paper. It is found that the tariff reductions lowered employment predominantly among less-skilled workers but did not affect the earnings of either skilled or less-skilled workers. The employment effects are due to the fact that relatively less-skill-intensive industries were more highly protected than high-skill-intensive industries prior to CUSTA.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 33 (2000)
Issue (Month): 2 (May)
Pages: 540-563
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Handle: RePEc:cje:issued:v:33:y:2000:i:2:p:540-563

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  1. Baotai Wang & Ajit Dayanandan, 2006. "Unit Root Tests of Canadian Poverty Measures," Economics Bulletin, Economics Bulletin, vol. 9(2), pages 1-7. [Downloadable!]
  2. Gu, Wulong & Sawchuk, Gary & Whewell, Lori, 2003. "Effet de la réduction des tarifs sur la taille et sur le roulement des entreprises dans le secteur canadien de la fabrication," Série de documents de recherche sur l'analyse économique (AE) 2003014f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  3. Daniel Trefler, 2001. "The Long and Short of the Canada-U.S. Free Trade Agreement," NBER Working Papers 8293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Daniel Schwanen, 2001. "Trade Liberalization and Inequality in Canada in the 1990s," The Review of Economic Performance and Social Progress, in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2001: The Longest Decade: Canada in the 1990s, volume 1 Centre for the Study of Living Standards & The Institutute for Research on Public Policy. [Downloadable!]
  5. Henry G. Overman & L. Alan Winters, 2003. "Trade Shocks and Industrial Location: the Impact of EEC Accession on the UK," CEP Discussion Papers dp0588, Centre for Economic Performance, LSE. [Downloadable!]
  6. Ian Keay, 2001. "An Empty Promise: Average Cost Savings and Scale Economies Among Canadian and American Manufacturers, 1910-1998," Working Papers 1002, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  7. Richard P. Chaykowski, 2002. "Globalization and the Modernization of Canadian Labour Policy," Canadian Public Policy, University of Toronto Press, vol. 28(1), pages 81-91, March. [Downloadable!] (restricted)
  8. Larochelle-Côté, Sébastien, 2005. "Summary Of: Tariff Reduction and Employment in Canadian Manufacturing, 1988-1994," Analytical Studies Branch Research Paper Series 2005259e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  9. Gu, Wulong & Sawchuk, Gary & Whewell, Lori, 2003. "The Effect of Tariff Reductions on Firm Size and Firm Turnover in Canadian Manufacturing," Economic Analysis (EA) Research Paper Series 2003014e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  10. Baggs, Jennifer & Brander, James A., 2005. "Trade Liberalization, Profitability, and Financial Leverage," Analytical Studies Branch Research Paper Series 2005256e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
    Other versions:
  11. Larochelle-Côté, Sébastien, 2005. "Réductions tarifaires et emploi dans le secteur de la fabrication au Canada, 1988 à 1994," Direction des études analytiques : documents de recherche 2005258f, Statistics Canada, Direction des études analytiques. [Downloadable!]
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